In recent weeks banks have once again hit the headlines, and not in a good way!
First we had Barclays being fined £290 million regarding the manipulation of Libor. The process of setting Libor is fairly simple. At 11am the banks call the Libor office and report what rate of interest they would have to pay if they borrowed money that morning. The top quarter are dismissed, as are the bottom quarter with the average taken of the remaining quotes. Effectively, the banks are in charge of setting Libor.
However, those self same banks have other departments that can make money by influencing the direction of Libor. Was it such a surprise that banks were tempted to try to move the rate to their own advantage?
We then have HSBC who ‘fell short’ in their Money Laundering and regulatory controls. Documents have revealed that HSBC has been accused of consist failures to prevent terrorists and drug cartels laundering money. According to the US Senate Committee, HSBC has accepted more than $15bn (£9.6bn) of bulk cash transactions without conducting the proper anti money laundering checks.
In both cases, the banks have been the victims of putting profit over the right thing to do. However, it is important to remember that this applies across the financial services industry. Banks, private banks, IFA’s, financial planners, wealth managers and all the other multitude of organisations that safeguard client money face potential conflicts of interest every day. However, how do they manage that conflict of interest and ensure they act in their clients best interests? Who guards the guards?
In our case, this is an issue we are very conscious of. We tackle it from several angles.
- We are privately owned and directly authorised. This means we have no parent company or network dictating to us which products we use, pushing us on targets or telling us how we should work with each client.
- We are fee based. There is no financial incentive for us to recommend one action or product over another. We are paid by you, and work for you.
- We only offer advice. We don’t manufacture products in the background or anything else that takes our eye off the ball. We are never in a position where we need to ‘push’ the latest offering from an internal fund range.
Coupled with this, we pay an external independent compliance consultant to come in and give us an independent view on our processes, the quality of our advice and check client files. This ensures we don’t lose sight of what we have set out to do…provide the highest quality advice possible!
After all, if we align ourselves with our clients, their success becomes our success. In my, most humble, opinion, this is the way it should be. If you’re not receiving this service currently, or would like a second opinion to see how we work,
please get in contact.